Faye Harlan, CFA, is estimating the cost of common equity for Cyrene Corporation. She prepares the following data for Cyrene:
·Price per share = $50.
·Expected dividend per share = $3.
·Expected retention ratio = 30%.
·Expected return on equity = 20%.
·Beta = 0.89.
·Yield to maturity on outstanding debt = 10%.
·The expected market rate of return is 12% and the risk-free rate is 3%.
Based on these data, Harlan determines that Cyrene's cost of common equity is 14%. Harlan most likely arrived at this estimate by using the:

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